AI moratorium could return despite removal from ‘Big, Beautiful Bill’

Government leaders and some outside groups took a victory lap after the Senate removed a provision from the recently passed reconciliation bill that would have prevented states from regulating artificial intelligence for 10 years. But experts warned that another attempt at a moratorium could be on the horizon.

Senators voted 99-1 to amend the so-called “Big, Beautiful Bill” to remove the provision as they finalized legislation to advance much of President Donald Trump’s legislative agenda. The House had inserted the moratorium as part of its negotiations and passed it, although it quickly attracted bipartisan criticism before its removal in the Senate. The House then passed the Senate’s version, without the moratorium, before the July 4 holiday.

 "We applaud the Senate's extraordinary 99-1 vote to strip the AI moratorium from the reconciliation bill,” National Conference of State Legislatures President and Utah Senate President Pro Tempore Wayne Harper; President-Elect and Illinois Assistant Majority Leader Marcus Evans; Vice President and Montana Senate Majority Whip Barry Usher; and President Emeritus and Rhode Island Speaker Pro Tempore Brian Patrick Kennedy said in a joint statement. “This action sends a strong message that states will stay on the front lines in safely advancing AI innovations while protecting our constituents.”

Some suggested that a national effort to prevent states from regulating AI is not going anywhere, however, despite this defeat in Congress. In a blog post, the tech accelerator ALFA Institute, backed by former House Speaker Kevin McCarthy, said the idea will “live to fight another day” despite the moratorium’s defeat in a “setback for American AI leadership and a missed opportunity.”

“Technology doesn’t pause for procedural niceties,” the post continued. “Yet Congress continues to treat AI like something that can be safely bracketed into old models and frameworks. That instinct — to sideline, defer, delay — doesn’t just waste time. It opens the door for a fragmented, 50-state patchwork that undermines any semblance of a national strategy. Even symbolic legislative defeats matter. They risk casting a long shadow and chilling future action. But that can’t be allowed to happen here.”

Proponents of the state AI moratorium warned that a fragmented approach to regulating the technology, led by state governments, risked America’s international leadership on AI. Congress must act, some argued.

“Now, many of our best innovators will have to retrench and reorganize their efforts to deal with complying first with a growing thicket of parochial regulations that kneecap their ability to innovation [sic] and invest as fast as they otherwise would have to confront the China challenge,” Adam Thierer, a senior fellow at the R Street Institute think tank, wrote in a Medium post. “This could have devastating ramifications for America’s geopolitical standing and security.”

Thierer also warned that California and New York will “now take the lead in shaping national AI policy,” which he suggested would include “European-style technology mandates and the old Biden administration woke AI playbook.”

“The ‘states’ rights’ argument does not work when only the largest states are setting the regulatory compliance baseline for the entire nation, forcing everyone to comply with the most onerous mandates without regard to the broader ramifications,” Thierer continued. “Regardless, Sacramento and Albany lawmakers now call the shots for the nation, and they will establish a very heavy-handed, technocratic baseline for AI innovation.”

Another national moratorium on states’ AI regulations won’t be easy, if this episode is anything to go by. In the lead-up to the Senate vote, 17 Republican governors wrote to their party’s Congressional leaders urging them to remove the provision, and “[let] states function as the laboratories of democracy they were intended to be and allow state leaders to protect our people.”

“Over the next decade, this novel technology will be used throughout our society, for harm and good,” the governors wrote. “It will significantly alter our industries, jobs, and ways of life, and rebuild how we as a people function in profound and fundamental ways. That Congress is burying a provision that will strip the right of any state to regulate this technology in any way — without a thoughtful public debate — is the antithesis of what our Founders envisioned.”

Before the provision was removed, swaths of state lawmakers from across the country had raised their opposition too, including via a joint letter and a press conference. A bipartisan coalition of state attorneys general had also voiced their concerns about the moratorium. Removing states’ guardrails as they continue to study AI would be perilous, leaders warned.

“Utah has taken a very thoughtful and proactive approach to AI policy,” Utah State Rep. Doug Fiefia said during the press conference, hosted by Americans for Responsible Innovation. “We've established an AI regulatory sandbox; this allows innovators to test emerging technologies while we study real world impacts. We also created a dedicated office of AI policy; this helps guide our long-term approach and ensure we stay ahead of risks and opportunities. This federal moratorium would freeze this forward-thinking work, it would prevent Utah and other states from responding to new developments, refining guard rails and learning through hands-on policy innovation.”